Kraken, a cryptocurrency exchange, has filed 56 million forms with the US Internal Revenue Service for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1, and over half for $10 or less. According to the company, only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, with 74% being for less than $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer. Furthermore, standard tax software does not support crypto transactions, with Kraken estimating the additional burden on active crypto holders to be between $250 and $500 per year for dedicated tax software, on top of standard filing costs.
The company argues that the time spent by taxpayers on reconciling these micro-transactions generates costs that are disproportionate to the revenue the IRS will collect. The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses, while the National Taxpayers Union Foundation puts the average time for non-business filers at around 13 hours and $290 per return. Kraken identifies two issues with the tax code: the lack of a minimum threshold for crypto payments, which means even small purchases can trigger a taxable event, and the treatment of staking rewards as ordinary income at the moment of receipt. The company is advocating for a broader inflation-indexed exemption, paired with anti-abuse guardrails, and is also pushing for taxpayers to be allowed to choose when staking rewards are taxed, either at receipt or at sale.